Lewis Manufacturing Company Is Planning to Invest in Equipment Costing

question 30

Multiple Choice

Lewis Manufacturing Company is planning to invest in equipment costing £240,000. The estimated cash flows from this equipment are expected to be as follows: $\begin{array}{cr}\text { Year } & \text { Cash Inflows } \\1 & £ 100,000 \\2 & 75,000 \\3 & 55,000 \\4 & 40,000 \\5 & 50,000 \\\text { Total } & £ 320,000 \end{array}$ Assume that the cash inflows occur evenly over the year. The payback period for this investment is

• A)3.75 years.
• B)3.25 years.
• C)2.4 years.
• D)1.3 years.

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